The United States eases sanctions on Venezuela after the election agreement

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The United States partially lifted sanctions on Venezuela after talks resumed between the South American country’s socialist government and a US-backed opposition faction.

On Wednesday evening, the US Treasury Department issued a six-month license allowing transactions in Venezuela’s oil and gas sectors, and a separate license allowing dealings with national gold mining company Minervin.

The Treasury also amended existing licenses to remove the ban on secondary trading of certain Venezuelan bonds and the debt of state oil company Petroleos de Venezuela (PDVSA), although the ban on primary trading remains in effect.

The announcement of sanctions relief comes a day after Maduro’s government and the Unitary Platform – a faction of the opposition backed by the United States – resumed talks in Barbados. They agreed to hold presidential elections in the latter half of next year.

“In response to these democratic developments, the US Treasury issued general licenses allowing transactions related to Venezuela’s oil and gas sector and gold sector, in addition to removing the ban on secondary trade,” the Treasury Department said in a statement.

The Venezuelan government and opposition agreed to allow international observers to enter Venezuela to conduct the elections. They also agreed that all qualified candidates may participate in the elections, and that each side may choose its candidate according to its own rules.

The opposition will hold its primaries on Sunday, although front-runner Maria Corina Machado was barred in June from taking office over her support for US sanctions and Juan Guaido’s US-backed parallel presidency in 2019.

US Secretary of State Antony Blinken said on Wednesday night that Washington expects the Venezuelan government to begin releasing political prisoners and unjustly detained US citizens, and to begin lifting the ban on all candidates by the end of November.

He added, “Failure to adhere to the terms of this arrangement will force the United States to retreat from the steps we have taken.”

“We believe this roadmap is the most viable path for the people of Venezuela to secure a lasting agreement that leads to competitive elections, the restoration of the democratic system, and an end to the humanitarian crisis in Venezuela,” a US official said.

The official added that the United States “reserves the authority to modify or revoke all licenses.” [Nicolás] “Maduro and his representatives have failed to implement their obligations.”

Maduro, who is widely expected to run for re-election, assumed the presidency in 2013 after the death of Hugo Chavez, the father of the so-called Bolivarian Revolution, which encouraged massive public spending by underwriting the country’s oil wealth.

Venezuela boasts the world’s largest proven oil reserves, and was once pumping about three million barrels per day, although production today is much less than one million barrels per day.

Corruption and low oil prices led to an economic collapse in Venezuela, hyperinflation, food and medicine shortages, and the displacement of more than seven million citizens. Meanwhile, Maduro has tightened his grip on power, banning or imprisoning political opponents and suppressing protests. The United States, the European Union, and the Venezuelan opposition considered his re-election in 2018 fraudulent.

In 2019, the Trump administration imposed tough sanctions on the country, as it sought to oust Maduro by recognizing Guaido’s presidency.

Washington is seeking ways to boost global oil supplies in the wake of Russia’s large-scale invasion of Ukraine last year, which sent energy prices soaring.

It has depleted nearly 300 million barrels of U.S. Strategic Petroleum Reserve and last year lifted some energy restrictions on Venezuela by granting Chevron a Treasury Department license to resume limited oil production from its joint venture with PDVSA.

Most analysts said the easing of US sanctions would have a limited short- to medium-term impact on Venezuelan production and exports due to the decade-long collapse of capital investment. Rystad Research Group said that Venezuelan production could rise to a maximum of 200,000 barrels per day after six months of easing sanctions.